A Las Vegas man was sentenced Monday to 20 months in federal prison for his role in a telemarketing scheme that defrauded more than 1,000 timeshare owners out of approximately $780,000, announced United States Attorney Nicholas A. Trutanich for the District of Nevada.
Michael Kroger, 60, pleaded guilty on the eve of his jury trial to conspiracy to commit mail fraud and wire fraud. In addition to the prison term, United States District Judge Jennifer A. Dorsey, who noted during the sentencing that Kroger showed no remorse for his crimes’ financial and emotional impact on his victims, ordered Kroger, to pay restitution in the amount of approximately $212,396.
According to court documents, from around 2000 until about March 2010, there was an agreement between two or more persons to carry out a fraudulent timeshare ownership scheme. In about 2004, Kroger joined the conspiracy to fraudulently obtain money from victim timeshare owners. In furtherance of the scheme, Kroger and co-conspirator Michele Paonessa created fictitious companies and false contracts to lure in victims seeking to sell their timeshare ownerships. The fictitious contracts obligated victim timeshare owners to pay a monetary fee to process fictitious documents relating to the sales and to cover the closing costs. In reality, Kroger and Paonessa used the victims’ money for personal benefits and to further the scheme. Before victims would contact law enforcement or the Better Business Bureau, Kroger and Paonessa would abandon that business and create a new business which they continued to use to perpetrate the fraud. In all, approximately 29 fictitious companies were used in the scheme. Not a single timeshare ownership was actually sold during the course of the 10 year scheme. In total, approximately $782,090 was stolen from approximately 1,000 victims residing in Nevada, other states, and outside of the United States in places such as Canada.
Paonessa pleaded guilty and is scheduled to be sentenced on August 20, 2019. Paonessa faces the maximum penalty of 20 years of imprisonment and a fine of $250,000.
The case was investigated by the United States Secret Service, the Henderson Police Department, and the Southwestern Identity Theft and Fraud Taskforce (SWIFT). Assistant United States Attorneys Kimberly Frayn and Jared Grimmer prosecuted the case.